Will the impromptu Modi- Xi summit pave the way to India-China rapprochement?

Will the impromptu Modi- Xi summit pave the way to India-China rapprochement?

By Alan Fernandez /Daily Express

New Delhi, April 25: Last weekend, India came out with a surprising announcement that Prime Minister Narendra Modi will be visiting China on April 27 and 28 to have an unofficial summit with the Chinese President Xi Jinping.

Will the impromptu summit  lead to tangible policy changes or will it be another edition of Modi’s  earlier impulsive air dash to  Pakistan for a tete-a-tete with the then Prime Minister Nawaz Sharif which led to nothing?

Be that as it may, Modi’s move and Xi’s nod to it have been welcomed by Indians and Chinese, who are tired of the cold war which has been on since China became a power in the region.

Former Foreign Secretary S.Jaishankar described the dash to China as a “very bold step.”

The Chinese Foreign Minister Wang Yi told the visiting Indian Foreign Minister Sushma Swaraj last week, that the Modi-Xi interaction will be meaningful as “China is building socialism with Chinese characteristics and India is at a crucial stage in its development and revitalization.”

On her part, Swaraj appreciated China’s confirmation about the resumption of data sharing on the Brahmaputra and Sutlej rivers in 2018. She also expressed happiness over the resumption of the Kailash Mansarovar Yatra through the Nathu La route this year.

Apparently, issues bedeviling India-China relations were skirted in the Swaraj-Wang talks. And these issues include: the question of the China-Pakistan Economic Corridor (CPEC) passing through disputed Gilgit-Baltistan; and China’s opposition to India’s entry into the Nuclear Suppliers’ Group (NSG) and to India’s bid to get the UN to list the Pakistan-based Masood Azhar as a global terrorist. These issues had been holding up moves to reach a détente.

It is not possible to predict what Modi and Xi will talk about in their pow wow next week, but as Jaishankar said, personal diplomacy could lead to far reaching policy changes and significant adjustments.

But informed sources say that if the two leaders do not get out of the beaten track and think out of the box, this meeting like the ones earlier, will be fruitless.

The two leaders should have a deeper look at the problems facing bilateral relations; re-asses the importance and relevance of each issue in a changing context; and identify areas of mutual cooperation which could lead to investment, trade and cooperation in other fields.

China’s Expectations

China would like India to be realistic in its assessment of the impact of its huge and growing investments in South Asia, India’s backyard. It would like India to stop making a fuss about CPEC’s passing  through Gilgit-Baltistan  since it is not possible to retrieve this area from Pakistan (just as Pakistan cannot wrench Kashmir from India). China would also want India to stop looking at every new facility created by it in a South Asian country as a threat to India’s  security and prevent its neighbors from having normal ties with China.

Beijing would want India to shed its fear about allowing China to invest in its infrastructural developmental areas including ports and telecom. China would like India to understand that increased Chinese investments will help change the currently unbalanced bilateral economic relations.

China, with its excess capacity, is very keen on investing in India which is yet to develop its infrastructure. It wants India to be part of the Belt and Road Initiative (BRI) and share projects coming under it across the globe to make the BRI a win-win proposition.

On its part, India would like China to support India’s bid to be admitted to the Nuclear Suppliers’ Group (NSG).It also wants China not to block its bid to get the UN to list Pakistan-based Massod Azhar declared as a UN-designated terrorist

Narrowing Trade Gap

With the border issue having been put in virtual cold storage by mutual consent since the early 1990s, an issue crying for a solution is the trade imbalance which has been growing by leaps and bounds.

But India can narrow the trade gap only with the cooperation off China. India has been asking China for greater access to Indian goods but China has been reluctant to help because of strained relations with India.

China is India’s largest trading partner with bilateral trade reaching US$ 72 billion in 2016-17, an increase of 88% from US $38 billion in 2007-08.

But according to IndiaSpend website, India’s imports from China amounted to US$ 61 billion but China’s imports from India was only U$ 10 billion in 2016-17, making rising trade imbalance a major concern. India’s trade deficit with China increased from US$ 16 billion in 2007-08 to US$ 51 billion in 2016-17 or by 219 %.

India’s imports from China have more than doubled (125%) over the last decade, from $27 billion in 2007-08 to $61 billion in 2016-17. Imports crossed $63 billion in January 2018, the most in the last 10 years.

India’s major exports to China include ores, slag and ash, cotton, organic chemicals, mineral fuels/oils, copper and its articles. Imports include telecom instruments, electronic components and instruments, computer hardware, organic chemicals, plastics and plastic items.

“Imports exceed exports because of shortages/non-availability of items domestically or because of the cost competitiveness of the foreign manufacturers,” IndiaSpend quotes the Minister of State for Commerce, P.K.Chaudhary, told the parliament’s Upper House on March 7, 2018.

Another important factor is the competitive prices of Chinese products in the Indian market. For example, Chinese solar cells cost 35% less and solar panels 10-15% less compared to locally made ones, IndiaSpend said.

Some of  the reasons for the poor manufacturing capacity in India are high cost of land and electricity; low capacity utilization; and high cost of financing; Minister Chaudhury said.

Make In India

The website IndiaSpend said that India ranked 30 th.among 100 countries on the Structure of Production scale, a global manufacturing assessment index created by the World Economic Forum (WEF). Japan topped the list, followed by South Korea, Germany, Switzerland and China. India scored 5.99 on the index (on a scale of 0-10, where zero is the worst and 10 the best score), as compared with China’s 8.25 and Japan’s 8.99.

The WEF report cited human capital and sustainable resources as the two key challenges for India.

No doubt, there have been significant efforts to increase investments through initiatives like ‘Make in India’, but still, India is far behind China. India’s infrastructure is poor compared to China’s. Connectivity and uninterrupted electricity supply are lacking.

Indian Prime Minister wants to fast track normalization of relations with China before the Shanghai Cooperation Organization (SCO) summit in June this year. This is part of his  bid to have strategic and economic breakthroughs ahead of the Indian parliamentary elections in May 2019.

But the million dollar question is: “Is he ready make radical changes in his thinking and weave India’s economic interest with China’s? Will he accommodate the Xi’s pet project ,the Belt and Road Initiative, in the South Asian region and even make India part of it?

To Xi, this will be the litmus test of Modi’s sincerity about improving relations with China. If he doesn’t pass, Sino-Indian relations will be back to square one, marked by suspicion, obstruction and hidden animosity.